COMMERCIAL APPRAISER, MAI, APPRAISAL INSTITUTE, AI, SUCCEED IN EFFORTS TO REMOVE TRANSPARENCY FROM APPRAISAL CONTRACTS. BETTER BE CAREFUL WHEN DEALING WITH AN AI, MAI, APPRAISAL INSTITUTE MEMBER. IT IS NOW NECESSARY TO NOT ONLY ASK THE APPRAISER FOR A WRITTEN NON-CONFLICT OF INTEREST STATEMENT, YOU MUST ALSO ASK HIS/HER EMPLOYER.
IN OUR HUMBLE OPINION, WE FEEL THAT THE CONTRACT WAS BETWEEN CUSHMAN (THE VALUER) AND BUFFALO, NOT SKINNER AND BUFFALO. SO A DUTY TO REPORT WAS REQUIRED.
The defendant Fidelity Real Estate Company LLC (Fidelity) occupied the Property under a long term lease with an option to purchase the Property in the final year of the lease as set forth in an Option Agreement. The Option Agreement sets the purchase price at 95 percent of the “fair market value” (FMV) or $ 16,275,000, whichever is greater. If the parties could not agree upon the FMV, the Option Agreement set forth the specific appraisal process that the parties were to follow. Fidelity timely exercised its option to purchase and, with the parties unable to agree to the FMV, complied with the appraisal process, which included an independent appraisal. The Verified Complaint attacks the validity of the independent appraisal, contending among other things that the entity that employed the individual appraiser did not disclose a prior business relationship that it had with Fidelity.
The independent appraisal was performed by Robert Skinner. Skinner worked for Cushman & Wakefield (Cushman), which was selected in compliance with the terms of the Option Agreement.
That Code of Ethics (an Exhibit to the Verified Complaint) states: “It is unethical to provide a Service if a valuer has any direct or indirect, current or prospective personal interest in the subject or outcome of the service or with respect to the parties involved in the Service, unless…such personal interest is disclosed to the client prior to the valuer agreeing to provide the Service.” The Engagement Letter represented that the “undersigned appraiser has not provided prior services” within the preceding three years.
the Complaint alleges, in conclusory fashion, that Cushman’s failure to disclose this contract to the plaintiff was a “conflict of interest,” in violation of the terms of the Engagement Letter and in violation of the Code of Ethics.
For all the foregoing reasons and for other reasons stated in defendant’s thorough memorandum in support of the motion, the Motion to Dismiss is ALLOWED and the Complaint is hereby DISMISSED.